United States, Department of the Treasury, Internal Revenue Service, Greensboro, North Carolina (Agency) and National Treasury Employees Union, Chapter 50 (Union)

[ v61 p103 ]

61 FLRA No. 20

UNITED STATES
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
GREENSBORO, NORTH CAROLINA
(Agency)

and

NATIONAL TREASURY
EMPLOYEES UNION
CHAPTER 50
(Union)

0-AR-3910

_____

DECISION

July 14, 2005

_____

Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members [n1] 

I.      Statement of the Case

      This matter is before the Authority on exceptions to an award of Arbitrator William D. Ferguson filed by the Agency under § 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Union filed an opposition to the Agency's exceptions.

      The Arbitrator found that the Agency failed to counsel the grievant regarding his performance deficiencies in the manner required by the parties' agreement. As a remedy, the Arbitrator directed the Agency to raise the ratings the grievant received on his annual performance appraisal to the ratings of his previous appraisal.

      For the reasons that follow, we deny the Agency's exceptions.

II.      Background and Award

      For the appraisal period from January 2001 to January 2002, the grievant, a revenue officer, received a rating of 5 ("outstanding") for job element I, a rating of 4 ("exceeds fully successful") for job elements II, III, and V, and a rating of 3 ("fully successful") for job element IV.  [n2]  The grievant received an overall rating of "exceeds fully successful." Award at 2; Exceptions, Attach., Ex. U-3, Performance Appraisal and Retention Standard Rating.

      Beginning in April 2002, the grievant received several memos and inventory reviews from his supervisor noting various performance deficiencies. The memos and inventory reviews each stated which job element the noted performance deficiencies fell under. From July through October, the grievant was on sick leave for substantial periods of time. Upon returning to work on October 15, 2002 the grievant received his midyear review for the period from January 2002 through July 2002, which rated him 3 ("fully successful") on each job element. The grievant continued to receive memos and inventory reviews regarding performance deficiencies during the months following the midyear review.                         

      On January 29, 2003, the grievant received a memo from his supervisor advising him that if he wished to provide a self-assessment prior to his annual review, he should do so by February 12. The grievant did not respond. On February 20, 2003, the grievant was given his annual appraisal for the appraisal period from January 2002 - January 2003. The grievant received a rating of 3 on each job element and an overall rating of "fully successful."

      The Union filed a grievance alleging that the Agency violated Article 12 of the parties' agreement when it lowered the grievant's performance rating on his 2002-2003 annual appraisal from the rating he received the previous year. [n3]  The grievance alleged, in relevant part, that the grievant did not receive the counseling regarding his performance to which he was entitled under the parties' agreement, and that his mid-year appraisal was performed late. The grievance was not resolved, and was submitted to arbitration. [ v61 p104 ]

      The Arbitrator framed the issue as whether the Agency violated Article 12 of the parties' agreement in its preparation of the grievant's 2002-2003 performance appraisal. Award at 1. In resolving this issue, the Arbitrator determined that there were "two questions to be asked in this case. One: Did the appraisal accurately reflect [the g]rievant's performance [pursuant to Article 12, Section 4(B)(4)]? Two: Was the appraisal made in a fair and objective manner [pursuant to Article 12, Section 4(C)]?" Id. at 6.

      First, the Arbitrator found that "the Agency evidence clearly showe[d that the g]rievant's performance was deficient." Id. Accordingly, the Arbitrator found that the Union had failed to prove that the appraisal of the grievant's performance was not factually accurate.

      Next, the Arbitrator found that although the grievant received several memos during the appraisal period concerning his performance, the grievant "never received the timely and insightful counseling contemplated by [Article 12, Section 4(M)] to which he was entitled[.]" Id. at 10. In this regard, the Arbitrator concluded that Article 12, Section 4(M) "requires more than simply written notice to the employee and that management must engage in true counseling through meeting, discussion, consultation, etc. to impress upon the employee the [seriousness] of the situation and discuss what needs to be done to improve his performance plus mentoring or coaching or on-the-job training as stated in [Article 12, Section 4(M)]." Id. at 12. As such, the Arbitrator found that the Agency violated Article 12,  Section 4(M) and that he was authorized to cancel the "Fully Successful" appraisal.

      As to the remedy, the Arbitrator concluded that a remand to the Agency would be "of no avail[,]" because the Agency could not consider "shortcomings" for which the grievant was not provided counseling in rating the grievant's performance. Id. at 14. The Arbitrator noted "reluctance to award what might be considered a windfall to an experienced employee with twenty-five years service who reasonably must have known his performance was diminished." Id. However, the Arbitrator determined that he was precluded from independently evaluating what the ratings should have been. Instead, the Arbitrator found that for job element I, the grievant was entitled to an "outstanding" (5) rating because there was no evidence or documentation that the grievant was informed of the need for improvement in that element. As to job elements II, III, IV and V, the Arbitrator found that the grievant's ratings were lowered based on performance deficiencies for which he was provided written notice but never counseled. The Arbitrator concluded that "[a]bsent those shortcomings, management would have accorded [the grievant] the same ratings as in the prior appraisal." Id. As a remedy, the Arbitrator directed the Agency to raise the ratings the grievant received on his 2002-2003 performance appraisal for all of the elements to the ratings of his previous appraisal.

III.      Positions of the Parties

A.      Agency's Exceptions

      The Agency contends that the award is based on a nonfact because the portions of the parties' agreement that the Arbitrator cited as requiring verbal discussion could instead be accomplished nonverbally, such as through "`advice and recommendations[,] and supplemental training, coaching, mentoring, and other developmental activities[.]'" Exceptions at 9. The Agency also asserts that, even if verbal discussion was required, the grievant refused to engage in any communication with his supervisor. The Agency asserts that, because the grievant refused to speak with his supervisor, the award is based on a nonfact because it is based on the presumption that verbal communications were possible when they were not.

      Next, the Agency argues that the award fails to draw its essence from the agreement for three reasons: (1) Article 12, Section 4(M) does not specifically provide for verbal counseling; (2) the award "adds" a requirement for verbal counseling that exceeds the authority granted to the Arbitrator by Article 43, Section 4(A)(18); and (3) "[t]he Agency's efforts to provide the grievant with a fair and objective appraisal that measured his actual work performance [under Article 12, Section C] were thwarted by the Arbitrator's [a]ward." Id. at 10.

      Finally, the Agency asserts that the award is contrary to § 7106(a)(2) of the Statute. According to the Agency, the award "allows the grievant to effectively immunize himself from accountability for his performance errors and failures by virtue of his decision not to communicate with his manager." Id. at 11. In support of its argument, the Agency cites Navy Public Works Center, Pearl Harbor, Honolulu, Hawaii v. FLRA, 678 F.2d 97 (9th Cir. 1982) (Navy Public Works).

B.      Union's Opposition

      The Union argues that the award is not based on a nonfact because the question as to whether verbal communication was possible with the grievant concerns a factual matter that the parties disputed at hearing.

      Next, the Union asserts that the award does not fail to draw its essence from the parties' agreement. In this [ v61 p105 ] regard, the Union asserts that the Arbitrator's conclusion that the parties' agreement requires verbal counseling is not "unfounded or unconnected with the wording and purpose of the collective bargaining agreement." Opposition at 7.

      Finally, the Union contends that the award "does not abrogate the scope of management powers to assign work or direct employees[,]" and "has no relation to the general duty of accountability to supervisors." Id. at 8.

IV.      Analysis

A.      The award is not based on a nonfact

      To establish that an award is based on a nonfact, the appealing party must show that a central fact underlying the award is clearly erroneous, but for which the arbitrator would have reached a different result. See, e.g., Soc. Sec. Admin., Office of Hearings & Appeals, 58 FLRA 405, 407 (2003) (SSA). The Authority will not find an award deficient on the basis of the arbitrator's determination of any factual matter that the parties disputed at arbitration. See id. In addition, an arbitrator's interpretation of a collective bargaining agreement is not subject to challenge as a nonfact. See id.

      The Agency contends that the award is based on a nonfact because "the Arbitrator has presumed that verbal communications are required, and because he obviously presumed that verbal communications were possible when they were not[.]" Exceptions at 10. In this regard, the Agency argues that verbal discussions were impossible due to the grievant's refusal to communicate. The record reflects that the Agency raised this argument before the Arbitrator in its post-hearing brief. See Opposition, Attach. 2 at 14. As the parties disputed this matter before the Arbitrator, the Agency's exception provides no basis for finding the award deficient as based on a nonfact. See id.; United States Dep't of Def., Def. Logistics Agency, Def. Distrib. Depot, New Cumberland, Pa., 58 FLRA 750, 759 (2003).

      Moreover, the Arbitrator's finding that the parties' agreement required verbal communications constitutes the Arbitrator's interpretation of the parties' agreement and is not subject to challenge as a nonfact. See SSA, 58 FLRA at 407.

      Accordingly, we deny the Agency's nonfact exception.

B.      The award does not fail to draw its essence from the agreement

      In order for an award to be found deficient because it does not draw its essence from a collective bargaining agreement, a party must show that the award: (1) cannot in any rational way be derived from the agreement; (2) is so unfounded in reason and fact and so unconnected with the wording and purpose of the collective bargaining agreement as to manifest an infidelity to the obligation of the arbitrator; (3) evidences a manifest disregard for the agreement; or (4) does not represent a plausible interpretation of the agreement. See United States Dep't of Labor (OSHA), 34 FLRA 573, 575 (1990). The Authority and the courts defer to arbitrators in this context "because it is the arbitrator's construction of the agreement for which the parties have bargained." Id. at 576.

      The Arbitrator interpreted Article 12, Section 4(M) to require that the Agency engage in counseling through meetings, discussions, and consultation with the employee to impress upon the employee the seriousness of the situation and discuss what needed to be done to improve his performance in addition to the mentoring, coaching or on-the-job training required by Section 4(M). The Arbitrator concluded that the Agency violated Article 12, Section 4(M) because the grievant did not receive the counseling contemplated by Section 4(M) to which he was entitled.

      Article 12, Section 4(M) specifically states that counseling will normally take place when a supervisor notices a decrease in performance. According to the language of Section 4(M), such counseling is to include advice or recommendations on better communicating job requirements, identifying and providing supplemental training (classroom and on-the-job), and providing additional coaching, monitoring, mentoring, and other developmental activities to help improve employee performance until the employee shows improvement. Contrary to the Agency's claim, it is plausible that counseling that includes coaching, monitoring, and mentoring would require verbal discussions. As such, the Arbitrator's interpretation that the parties' agreement requires verbal discussions is not irrational or implausible, and does not evidence a manifest disregard of the parties' agreement. See Int'l Ass'n of Machinists & Aerospace Workers, Dist. Lodge 725, Local Lodge 726, 60 FLRA 196, 200 (2004). In addition, the Agency's remaining arguments, that Article 12, Section C requires that performance appraisals measure actual work performance and that Article 43, Section 4(A)(18) limits the scope of an arbitrator's authority, do not provide a basis on which to find the award deficient under the standard set forth above. Accordingly, the Agency has not established that the award fails to draw its essence from the parties' agreement, and we deny the exception. [ v61 p106 ]

C.      The award is not inconsistent with management's rights under § 7106(a) of the Statute

      The Agency's final argument is that the award is inconsistent with management's rights under § 7106(a)(2) of the Statute because it "allows the grievant to effectively immunize himself from accountability for his performance errors and failures by virtue of his decision not to communicate with his manager." Exceptions at 11. In this regard, the Agency claims that "[i]mposing and enforcing a duty to account" is within management's right to assign work and discipline employees and is therefore "nonnegotiable." Id.

      In resolving whether an arbitrator's award violates management's rights under § 7106 of the Statute, the Authority applies the framework established in United States Dep't of the Treasury, Bureau of Engraving & Printing, Wash., D.C., 53 FLRA 146, 151-54 (1997) (BEP). Upon finding that an award affects a management right under § 7106(a), the Authority applies a two-prong test to determine if the award is deficient. Under prong I, the Authority examines whether the award provides a remedy for a violation of either applicable law, within the meaning of § 7106(a)(2) of the Statute, or a contract provision that was negotiated pursuant to § 7106(b) of the Statute. Under prong II, the Authority considers whether the arbitrator's remedy reflects a reconstruction of what management would have done had it not violated the law or contractual provision at issue. See id. at 152-154.

      The Authority has held that management's evaluation of employees under an established performance appraisal system constitutes the exercise of the rights to direct employees and assign work under § 7106(a)(2)(A) of the Statute. See, e.g., id. at 154. By canceling the grievant's appraisal on the basis of the Agency's violation of Article 12, Section 4(M), the award affects the exercise of those rights. See id.

      The Agency does not argue that the award is deficient under prong I on the ground that the Arbitrator did not find a violation of an applicable law or a provision of a collective bargaining agreement that was negotiated pursuant to § 7106(b). Rather, the Agency's only argument is that the award "allows the grievant to effectively immunize himself from accountability for his performance errors and failures by virtue of his decision not to communicate with his manager." [n4]  Exceptions at 11. In support of its argument, the Agency cites Navy Public Works, a case which involves a proposal granting employees a right to remain silent during disciplinary investigations. The court found that the proposal at issue was nonnegotiable because it eliminated management's right to discipline an employee for the "refusal to account during disciplinary investigations[.]" Navy Public Works, 678 F.2d at 101.

      Contrary to the Agency's argument, Navy Public Works does not apply to the instant case because it involves a proposal that gives employees a right to decline to respond to questioning during an investigation. Here, the Arbitrator made no finding that the grievant refused to account for his performance or actions, and the Arbitrator would have no reason to do so. The issue before the Arbitrator was whether the supervisor was obligated to talk to the grievant - not vice versa. The Arbitrator found that the Agency violated Article 12, Section 4(M) because the grievant did not receive the counseling contemplated by Section 4(M) to which he was entitled, and the Agency has not provided a basis upon which to find that this finding conflicts with management's rights under § 7106(a)(2) of the Statute.

      Accordingly, we deny the Agency's exception.

V.      Decision

      The Agency's exceptions are denied. [n5]  [ v61 p107 ]


APPENDIX

Article 12

. . . .

Section 4
Performance Appraisals

. . . .

C.
Performance appraisals will be made in a fair and objective manner. They will measure actual work performance in relation to the performance requirements of the positions to which employees are assigned and will be based on a reasonable and representative sample of the employee's work.

. . . .

M.
The process of monitoring performance is on-going. Therefore, the Employer will counsel employees in relation to their overall performance rating on an as needed basis. Such counseling will normally take place when a supervisor notices a decrease in performance and include advice or recommendations on better communicating job requirements, identifying and providing supplemental training (classroom and on-the-job), and providing additional coaching, monitoring, mentoring, and other developmental activities, as appropriate, to help improve employee performance until the employee shows improvement. Special emphasis should be given to those cases when an employee's performance indicates a decrease in the overall rating.

Award at 2.

. . . .

Article 43, Section 4(A)(18)

. . . . The arbitrator will have no authority to add to, subtract from, alter, amend, or modify any provision of this agreement, or impose on either the [e]mployer or the [u]nion any limitation or obligation not specifically provided for under the terms of this Agreement. . . ."

Exceptions at 11.


Opinion of Member Armendariz, concurring in part and dissenting in part:

      I concur in my colleagues' analysis and conclusions that the award is not based on a nonfact and does not fail to draw its essence from the parties' collective bargaining agreement. However, I respectfully dissent from my colleagues' analysis and conclusions with respect to the Agency's exception that the award is inconsistent with management's rights under § 7106(a)(2) of the Statute.

      I construe the Agency's argument that the award impermissibly absolves the grievant of any accountability for his performance deficiencies as a contention that the award does not represent a reconstruction of what the Agency would have done if it had not violated the parties' agreement. In this regard, I would find that the award ordering the Agency to reinstate the ratings from the grievant's prior appraisal is deficient because it fails to satisfy prong II of BEP.

      The Arbitrator concluded that, because the Agency failed to counsel the grievant about his performance deficiencies in violation of the parties' agreement, these "shortcomings" could not be considered in the grievant's performance ratings. Award at 14. Despite finding that the evidence "clearly shows [that the g]rievant's performance was deficient[,]" id. at 6, and that the grievant's performance had "diminished[,]" id. at 14, the Arbitrator found that, absent these shortcomings, the Agency would have given the grievant the higher ratings in four of the five elements that he had received in the previous year's appraisal.

      Nothing in the record supports the Arbitrator's finding that if the grievant's supervisor had provided counseling in the manner that the Arbitrator found was required under Article 12, Section 4(M), then the grievant would have received the higher ratings that he had received in four of the five elements for the previous appraisal year. Accordingly, by requiring the Agency to reinstate the grievant's prior performance ratings, the award does not reflect a reconstruction of what the Agency would have done if it had complied with Article 12, Section 4(M) as interpreted by the Arbitrator. Consequently, this portion of the award is deficient. See United States Dep't of Health & Human Servs., Health Resources Services Admin., Rockville, Md., 60 FLRA 118 (2004) (Health Resources Services Admin.) (award reinstating rating from previous year did not reflect a reconstruction and was deficient as not based on evaluation of actual job performance); United States Dep't of the Army, United States Army Aviation & Missile Command, Redstone Arsenal, Ala., [ v61 p108 ] 58 FLRA 400 (2003) (Army Aviation & Missile Command) (award extending previous performance appraisal did not reconstruct what management would have rated grievant if supervisor had provided feedback required under parties' agreement); United States Dep't of the Air Force, Wright-Patterson Air Force Base, Ohio, 58 FLRA 145 (2002) (Chairman Cabaniss dissenting in part) (Wright-Patterson AFB) (award was not a reconstruction because it was not based on what management would have rated grievant if supervisor had provided "clear guidance" required by parties' agreement); United States Dep't of Def., Def. Logistics Agency, Def. Contract Mgmt. Command, Def. Contract Mgmt. Area Operations Boston, Boston, Mass., 53 FLRA 210 (1997) (DLA) (award was not a reconstruction because it was not based on what management would have done if it had not violated parties' agreement by failing to inform grievant of its dissatisfaction with grievant's performance).

      Where an award raising a grievant's performance appraisal is found deficient, but the finding that the agency failed to properly appraise the grievant is left intact, the Authority's practice is to modify the award to strike the ratings ordered by the arbitrator and direct the agency to properly reevaluate the grievant in accordance the parties' agreement or applicable regulations. See Health Resources Services Admin., 60 FLRA at 120 (award modified to strike ratings ordered by arbitrator and matter was remanded to agency to reevaluate grievant in accordance with regulation); Army Aviation & Missile Command, 58 FLRA at 404 (same); Wright-Patterson AFB, 58 FLRA at 147 (award modified to strike ratings ordered by arbitrator and agency was directed to reevaluate grievant in accordance with parties' agreement); DLA, 53 FLRA at 217 (award modified to strike ratings ordered by arbitrator and agency was ordered to reevaluate grievant only on the basis of information regarding work performance communicated to grievant in accordance with parties' agreement). I would do likewise here.



Footnote # 1 for 61 FLRA No. 20 - Authority's Decision

   Member Armendariz' separate opinion, concurring in part and dissenting in part, is set forth at the end of this decision.


Footnote # 2 for 61 FLRA No. 20 - Authority's Decision

   The critical job elements for the grievant's position are as follows:

I.     Employee Satisfaction - Employee Contribution;
II.     Customer Satisfaction - Knowledge;
III.     Customer Satisfaction - Application;
IV.     Business Results - Quality;
V.     Business Results - Efficiency.

Award at 2; Exceptions, Attach., Ex. U-3, Performance Appraisal and Retention Standard Rating.


Footnote # 3 for 61 FLRA No. 20 - Authority's Decision

   The relevant provisions of the parties' agreement are set forth in the Appendix to this decision.


Footnote # 4 for 61 FLRA No. 20 - Authority's Decision

   As this is the Agency's sole argument regarding management's rights, the dissent's construction of the argument as a claim that the award fails to reconstruct what the Agency would have done absent a violation of the agreement is without merit.


Footnote # 5 for 61 FLRA No. 20 - Authority's Decision

   Chairman Cabaniss notes that while the Agency may have had a valid argument against the Arbitrator's remedy, based upon the prong II requirements set out i